REG - Westmount Energy Ld - Final Results & Notice of AGM
09/11/2023 07:00
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RNS Number : 8525S Westmount Energy Limited 09 November 2023
9 November 2023
WESTMOUNT ENERGY LIMITED
("Westmount" or the "Company")
Final Results & Notice of AGM
The Company is pleased to announce its Final Results for the year ended 30 June 2023, and hereby gives notice that the Annual General Meeting of Westmount Energy Limited will be held at No 2 The Forum, Grenville Street, St Helier, Jersey JE1 4HH, Channel Islands on 7 December 2023 at 11.00.
Copies of the Company's results and Notice of AGM are available on the
Company's website, www.westmountenergy.com, and will be posted to shareholders
today.
CHAIRMAN'S REVIEW
2023 Highlights
· Canje Block, Guyana - Cumulative Impact Assessment filed with
Guyanese EPA in September 2023 suggests potential drilling on Canje from Q2
2024 - though specific guidance on timeline not yet available from Canje
partners
· Kaieteur Block - Exit of ExxonMobil and Hess with return of
licence equity to Ratio Petroleum 50% and CEC 50%; Ratio Petroleum already in
discussions with major oil companies with a view to bringing a new entrant or
entrants to the block
· Orinduik Block - ECO Atlantic to acquire Tullow's participating
interest and become block operator with 75% equity interest
· Investment in Africa Oil Corp - confirmation that Orange Basin,
offshore Namibia, is a major emerging hydrocarbon province with 5 significant
discoveries reported since early 2022
· Major milestones reported in the appraisal of the giant Venus
light oil discovery, with successful drilling of a 13km step-out appraisal
well at Venus-1A and the successful testing of sidetracked Venus-1X discovery
well
· Continuing newsflow anticipated from Namibian investment in Q4
2023 with the testing of Venus-1A appraisal well and the spudding of
Mangetti-1 exploration well
· JHI acquires 100% interest in Production Licence PL001 in the
North Falkland Basin from Argos Resources Ltd.
· CEC's Return of Capital Transaction yields additional USD $356k
cash
· Cash balance of £0.48M at 30 June 2023; no debt
With the gradual recalibration of global oil markets to a post pandemic world,
the last 12-month period has been characterised by a continued volatility in
oil prices, a weakening global macroeconomic outlook and the changing dynamics
of energy transition politics. After peaking at over $120 per barrel in June
2022, the average monthly Brent crude price had declined to less than $75 per
barrel by June 2023 in response to slowing international trade and the
perceived risk of a global recession. This gloomy macroeconomic outlook was
reinforced by tightening monetary policies in all the major economies, with
prolonged higher interest rates being used to tackle persistent inflation. In
addition, the disruption in global supply chains caused by the war in Ukraine
and a major slowdown in the property market in China, the primary oil demand
growth centre, have also contributed to reduced world trade flows. In May
2023, the OPEC+ alliance moved to support slumping oil prices with a strategy
of aggressive supply restraint - initially with several members agreeing a
collective reduction in oil production of 1.2 million b/d. This strategy was
further bolstered in July with unilateral declarations of additional voluntary
cuts in production of 1 million b/d by Saudi Arabia and 500k-300k b/d by
Russia - voluntary cuts which have subsequently been extended to year end. The
net effect has been a sharp rebound in oil prices throughout the summer months
with Brent crude reaching circa $95 per barrel in late September before the
rally petered out in the face of renewed macroeconomic concerns and signs of
demand destruction in the US and some emerging markets.
In the meantime, governments continue to recalibrate their energy transition
policies and emission reduction targets in the face of energy security
concerns sparked by the war in Ukraine and the challenge of energy
affordability for citizens grappling with cost-of-living increases on the back
of global inflationary pressures. Notwithstanding record global EV sales and
battery and solar installations in 2022 and the massive investment and
buildout of renewable energy capacity over the past 5 years, renewables have
only met 51% of new energy demand during this period, with fossil-fuel use
continuing to grow in absolute
terms and energy related CO(2) emissions continuing to rise(1). Conflicting
views also prevail with respect to the timing of peak oil demand, with OPEC's
Annual World Oil Outlook suggesting peak oil demand will not be reached until
2045, at 116 million b/d, in stark contrast with the analysis of the
International Energy Agency (IEA) which is forecasting oil demand peaking, at
circa 106 million b/d, prior to 2030(2,3). Recently announced giant M&A
deals by ExxonMobil/Pioneer Natural Resources and Chevron/Hess Corporation
reinforces the view that oil and gas are going to continue to play a role for
some time. In the more immediate term, the surprise attack by Hamas on Israel
on the 7 October has sharply increased geopolitical risk in the Middle East.
Though the initial response of the oil markets has been relatively modest the
situation is uncertain with a particular oil market concern that extended
military conflict may lead inter alia to stricter enforcement of existing US
sanctions on Iranian oil exports and precipitate spiking prices in a tight
market.
While upstream investment is forecast by the IEA to reach USD $528 billion in
2023(3), its highest level since 2015, in common with the broader energy
spectrum, the risk of underinvestment, relative to what is needed to meet
forecast energy demand across a range of 'net zero' demand trajectories,
remains a key theme for the oil and gas sector(4,5). Recent improvement in the
financial performance of the upstream sector combined with a drive by the
bigger companies to high-grade their portfolios with higher return, lower
carbon (Scope 1 and 2 emissions), oil and gas prospects is likely to
contribute to increased exploration spending in the near term(6). Spending in
deepwater and ultra-deepwater areas is forecast to grow most rapidly as the
inherent emission advantages of developing large resources in highly
productive deepwater reservoirs should continue to attract capital as industry
players high-grade prospect portfolios to align with ESG investment metrics
and financial return thresholds. Deepwater production is projected to increase
by over 60% between 2022 and 2030 with the NOCs and majors continuing to
dominate while Mid-Caps retreat from this space(7). Exploration 'hotspots' in
the deepwater Guyana-Suriname Basin, offshore Guyana and the Orange Basin,
offshore Namibia are two areas that are well positioned to capture their share
of this increased exploration spending.
Guyana-Suriname Basin (offshore Guyana)
Since 2015 offshore Guyana has been transformed from a frontier deepwater
exploration opportunity into the industry's largest new oil province with more
than 11 billion barrels of oil equivalent discovered recoverable resource to
date. Guyana is now established as a significant oil producing nation,
currently averaging production of circa 380k BOPD in Q2 2023 from Liza Phase 1
and Phase 2 projects, with three other developments already sanctioned and on
track for start-up - Payara (220k BOPD, Q4 2023); Yellowtail (250k BOPD,
2025); Uaru (250k BOPD, 2026), with the expected installation of at least 6
Floating Production Storage and Offloading (FPSO) units on the Stabroek Block
by end 2027 (with a production capacity of more than 1.2 million BOPD) and the
potential for up to 10 FPSOs(5).
In parallel with the development of the already discovered resource offshore
Guyana, the multi-billion barrels undiscovered upside in the basin continues
to attract aggressive exploration investment, driven by large prospects, low
breakeven costs, low carbon emissions and the energy transition dynamics. It
is anticipated that Guyana's total recoverable oil deposits will increase as
exploration activities expand to deeper plays and other offshore blocks, which
remain underexplored. On the Stabroek Block, the JV partners have maintained
an outstanding exploration success rate. Aside from a rare duster reported to
have occurred at Kokwari-1 during Q1 2023(8), the Stabroek exploration
drilling effort has yielded a total of twelve significant discoveries since
early 2022 (Fangtooth-1, Lau Lau-1, Patwa-1, Lukanani-1, Barreleye-1,
Seabob-1, Kiru Kiru-1, Yarrow-1, Sailfin-1, Fangtooth SE-1, Lancetfish-1 and
Lancetfish-2) bringing the total number of discoveries to date, on the
Stabroek block to thirty three(5,8). The positive outcome at Fangtooth-1 is of
particular significance as this was the first well dedicated to a deep
exploration target in the Stabroek area, with the results indicating the
potential for commercial exploitation of the deeper plays and offering
encouragement for the drilling of deep targets elsewhere in the basin,
including on the Kaieteur and Canje Blocks. The potential for a significant
deep discovery at Fangtooth was confirmed in January 2023 when the Stabroek
partners reported that 61 metres of oil-bearing sandstone reservoirs had been
encountered at Fangtooth SE-1, which was drilled circa 13 kms to the southeast
of the original Fangtooth-1 discovery. A further discovery in this area was
reported in April 2023, with 28 metres of oil-bearing sandstone encountered at
Lancetfish-1. This discovery was confirmed in October 2023 with the
Lancetfish-2 appraisal well which encountered 38 metres of net oil pay in the
same reservoirs as well as an additional 20 metres of net oil pay in a new
interval(8). In July 2023, Hess reported that the Stabroek partners had
secured a one-year extension to the Stabroek exploration licence, from October
2026 to October 2027, as
well as the postponement of a 20% relinquishment decision until October 2024,
both as a result of force majeure due to the COVID-19 pandemic(8).
Outside of Stabroek, in May 2022, the Joint Venture of CGX Energy Inc. and
Frontera Energy Corporation announced a discovery at Kawa-1 in the north of
the Corentyne Block. Logging of this well indicated 69 metres of net
hydrocarbon pay across multiple Upper Cretaceous reservoirs. Reservoir fluids
are uncertain as MDT fluid samples were not obtained from the well, though
third-party analyses indicated the presence of light oil in the deeper
Santonian and Coniacian reservoirs, and gas condensate in the shallower
Maastrichtian and Campanian, consistent with neighbouring discoveries on the
Stabroek block and in Block 58, Suriname(9). Kawa-1 was plugged and abandoned
and the commercial potential of the discovery has yet to be determined. After
realignment of stakeholder interests on the Corentyne Block a follow-up joint
exploration/appraisal effort, Wei-1, was spudded on 20 January 2023, targeting
stacked Campanian and Santonian channel sandstone reservoirs. On 13 June 2023,
some significant cost overruns and operational problems were reported,
including the loss of a sampling tool, which necessitated the drilling of a
by-pass well bore (Wei-1BP1) to reach the planned TD. Nevertheless, on 28 June
2023, CGX Energy Inc. announced that 64 metres of hydrocarbon bearing
sandstone had been logged in the Santonian interval though oil samples had not
been obtained due to downhole tool failure. In addition, the previously
announced discovery of 23.5 metres of net oil pay in the
Maastrichtian-Campanian interval was confirmed with fluid sampling indicating
the presence of light oil in the Campanian and sweet medium crude oil,
24.9(o)API, in the Maastrichtian(9). The commercial potential of the Wei-1
discovery has yet to be determined.
Separately, in December 2022, the Guyanese government launched a Licensing
Round for 14 offshore blocks (3 deepwater and 11 shallow water blocks) under
revised fiscal and contractual terms including biddable signature bonus with a
minimum threshold of USD $20M and $10M for deepwater and shallow water blocks,
respectively. In parallel, the government has indicated that some other
blocks, ex Licensing Round, have been set aside with a view to exploration and
development of these blocks via strategic direct government-to-government
partnerships. On 15 September, it was announced that bids had been received
for eight of the fourteen blocks on offer, with a total of 14 bidders in 6
groups, including the ExxonMobil/Hess/CNOOC and the
TotalEnergies/QatarEnergy/Petronas groups. These bids are currently under
evaluation with the government looking to commence negotiations with bidders
in early November 2023.
In the Surinamese sector mixed results have been reported during this period.
The TotalEnergies/Apache consortium increased its discovery count from 4 to 6
with the announcement of the Krabdagu-1 (Block 58) and Baja-1 (Block 53)
discoveries in February and August 2022, respectively, although non-commercial
outcomes were reported at Rasper-1, Dikkop-1 and Awari-1(10). In contrast,
significant light oil flow test results were achieved from Campanian
reservoirs in appraisal wells at Sapakara South-1, Sapakara South-2 and
Krabdagu-1 during this period. In August 2023 a successful appraisal well was
reported at Krabdagu-3, approximately 14 kms from the discovery well. Prior
stacked reservoir discoveries on Block 58 reported generally light oil and
gas-condensate pay in shallower Maastrichtian-Campanian reservoirs overlying
light oil pay in deeper Santonian reservoirs - pointing towards some potential
challenges around valorization of large associated gas volumes. The initial
mixed exploration and appraisal drilling results on Block 58, which included
three gas-condensate discoveries, redirected the consortium to focus on
proving up sufficient oil volumes in the shallower, Campanian, Sapakara and
Krabdagu discoveries in the east of the block. In September 2023 the operator,
TotalEnergies, reported that the Sapkara South and Krabdagu low-GOR oil
discoveries we've now fully appraised bringing together a combined 700 million
barrels of recoverable resources which would be developed using a 200,000
barrels per day FPSO, with full gas reinjection, meeting the operator's
requirements in terms of unit cost and emissions intensity. FID is targeted
for the end of 2024 with first oil planned for 2028(11).
Exploration drilling results continue to support the presence of multiple
plays, quality reservoirs and the potential for stacked-pay drilling
opportunities within the basin. Although the Upper Cretaceous
Maastrichtian-Campanian Liza play dominates in terms of number of discoveries
and discovered volumes to date, the deeper Santonian pools on Block 58, in
conjunction with the deeper hydrocarbons reported at Liza-3, Tripletail-1,
Yellowtail-2, Uaru-2, Turbot-2, Longtail-3, Hassa-1, Fangtooth-1 and Fangtooth
SE-1 on the Stabroek Block, together with the hydrocarbon shows reported at
Sapote-1 on the Canje Block, and the logged net pay in the Santonian-Coniacian
intervals at Kawa-1 and Wei-1 on the Corentyne Block, all suggest an extensive
emerging deeper play fairway within the basin. Offshore Suriname, oil pay was
also
reported from the Zanderij-1 (Shell, Block 42) where the operator was
targeting the Santonian and deeper intervals, with well results currently
under evaluation(12).
It is against this backdrop that the hydrocarbon plays and prospect
inventories on the Kaieteur, Canje and Orinduik blocks are being reassessed -
with a view to the identification of optimal targets for the next phase of
drilling, while progressing the ongoing environmental permitting processes and
financing challenges where relevant.
Orange Basin (offshore Namibia)
Although Namibia does not yet produce any oil or gas, in early 2022, the
deepwater Orange Basin became the latest global exploration hotspot, ignited
by the announcements in quick succession of major oil discoveries by groups
headed by Shell and TotalEnergies. Firstly, on 4 February 2022, Shell (45%,
operator) and partners QatarEnergy (45%) and NAMCOR (10%) announced a
significant oil discovery at Graff-1x, on Block 2913A. The well is understood
to have found oil in two Upper Cretaceous reservoirs and a subsequent DST at
Graff-1x is reported to have flowed at exceptional rates ("flowed like a
train")(13, 14).
Following a successful appraisal by the Rona-1x well, initial resource
estimates from NAMCOR suggest 2.38 bn bbls of oil in place at Graff(15), with
a separate estimate of 700 MMbbls recoverable offered by a Wood Mackenzie
analysis. Secondly, on the 24 February 2022, TotalEnergies (40%, operator) and
partners QatarEnergy (30%), Impact (20%) and NAMCOR (10%) announced a major
light oil with associated gas discovery at Venus-1x, on Block 2913B. This
play-opening discovery well encountered a high-quality, light oil-bearing
sandstone reservoir of Lower Cretaceous age, with 84 meters of net oil
pay(16). Subsequently, the discovery has been successfully appraised during
2023 with the drilling of Venus-1A appraisal well, and with a positive flow
test performed in a sidetrack of the discovery well Venus-1x(11). Initial
resource estimates from NAMCOR suggest 5.1 bn bbls of oil in place at the
Venus-1x discovery(15). This second significant discovery at Venus-1x, in a
stratigraphically deeper Cretaceous play, has confirmed the enormous potential
of the Orange Basin as a major emerging hydrocarbon province.
Less than two years later, this initial wave of deepwater exploration in the
Orange Basin has, to date, yielded a total 5 oil discoveries (Graff-1x,
Venus-1x, La Rona-1x, Jonker-1x and Lesedi-1x) from 7 exploration wells, with
an estimated 11 bn bbls of oil in place and 9 TCF of associated gas discovered
since early 2022(15). Accelerated work programs, including the drilling and
testing of large appraisal step-out wells, is currently ongoing at Venus
(Venus-1A) and Jonker (Jonker-1A) with these discoveries already high-graded
as potential fast track, multiphase developments. A further ramping up of
exploration activity in the basin has been triggered by these early successes
with a number of big company farm-ins (Chevron and Woodside) resulting in
large scale 3D seismic acquisition programs on adjacent acreage, in addition
to infill 3D acquisition programs on the discovery blocks. In parallel with
these developments, additional exploration drilling on the discovery blocks
and adjacent acreage is also anticipated in the near term with the imminent
spudding of Mangetti-1 by TotalEnergies on Block 2913B (PEL 56) and the
spudding of the first exploration well, in a potential two well program, by
Galp Energia on Block 2813B (PEL 83), in Q4 2023.
With moderate above ground risks, favourable fiscal terms (government take is
circa 57%), prolific deepwater reservoirs and multiple play opening
discoveries, the Orange Basin, offshore Namibia looks to be at the early part
of the creaming curve with the potential for the discovery of additional large
scale advantaged resources.
Guyana-Suriname Basin - offshore Guyana
Kaieteur Block (offshore Guyana)
The first well on the Kaieteur block, Tanager-1, remains the deepest well
drilled in the Guyana-Suriname Basin to date. It was spudded on 11 August
2020, using the Stena Carron drillship. The well was drilled in a water depth
of 2,900 metres and reached a total depth of 7,633 metres circa mid-November
2020. Evaluation of LWD, wireline logging and sampling data confirmed 16
metres of net oil pay (20(o)API oil) in high-quality sandstone reservoirs of
Maastrichtian age. Although high quality reservoirs were also encountered at
the deeper Santonian and Turonian intervals, initial interpretation of the
reservoir fluids was reported to be equivocal, requiring further analysis -
results of which have yet to be disclosed. Post well
analysis and integration of the data collected continues with a view to
high-grading the next drilling target on the Kaieteur block.
A post-well Netherland, Sewell & Associates Inc. ("NSAI") published CPR
(14 February 2021) indicates that the Tanager-1 Maastrichtian discovery
contains a 'Best Estimate' Unrisked Gross (2C) Contingent Oil Resource of 65.3
MMBBLs (Low to High Estimates 17.7 MMBBLs to 131 MMBBLs) - with a 'Best
Estimate' Unrisked Net (2C) Contingent Oil Resource attributable to the
Kaieteur Block of 42.7 MMBBLs (Low to High Estimates 11.3 MMBBLs to 86
MMBBLs). However, this discovery is currently considered to be non-commercial
as a standalone development.
Subsequent to the Tanager-1 discovery, on 24 May 2021, it was announced that
Hess Corporation ("Hess") had increased its working interest ("WI") in the
Kaieteur Block, offshore Guyana, from 15% to 20% via the farm-down of a 5% WI
by Cataleya Energy Limited ("CEL"). Although the details of this farm-in
transaction were not disclosed this farm-in, by one of the Stabroek block
partners and a leading player in the Guyana-Suriname basin, suggests
confidence in the prospective resource potential of the Kaieteur Block and
augurs well for the continuing exploration of the area.
On 23 August 2021, it was announced that the date for elective nomination, by
the operator, of the prospect target for the 2(nd) well on the Kaieteur Block
had been extended by seven months and on 22 March 2022 a further extension of
the nomination date was agreed to 2 October 2023. The Kaieteur Block partners
agreed to this extension to facilitate continuing geological and geophysical
analysis by the operator and integration of recent and ongoing deep play
drilling program results on adjacent blocks into the Kaieteur prospect
nomination decision. Under a farm-in agreement executed with ExxonMobil
(operator) in 2016, any drilling consequent to the 2(nd) well prospect
nomination decision would commence within nine months of the nomination date.
The operator, as farminee, continued to bear all farmor JV expenses during the
prospect nomination extension period.
In September 2021, the operator, ExxonMobil, submitted an application to the
Guyanese Environmental Protection Agency ("EPA") seeking environmental
authorization to proceed with an up to 12 well exploration campaign on the
Kaieteur Block. Although the EPA initially declared that the project was
exempt from the requirement of an Environmental Impact Assessment (EIA),
following appeals submitted against the EPA's decision, it was subsequently
determined in August 2022 that an EIA would be required to assess the
potential 'collective impacts' of the proposed drilling campaigns on Kaieteur
and the contiguous blocks.
On 27 September 2023, it was announced by Ratio Petroleum Energy Limited
Partnership ("Ratio Petroleum"), that ExxonMobil had decided not to commit to
drilling a second well on the Kaieteur Block and that both ExxonMobil and Hess
had elected to withdraw from the Kaieteur Block and return their participating
interests to the original Kaieteur Licence holders, Ratio Guyana Limited
("RGL") and Cataleya Energy Limited ("CEL"). The parties are now seeking
government approval to reassign the participating interests, so that RGL and
CEL will each retain a 50% participating interest, and to appoint RGL as the
operator of the block. It was also announced that under the terms of the
Kaieteur Petroleum Agreement, and upon submission of an application to enter
the second extension period, the participating interests on the block will
have until February 2025 to commit to drilling a well. In this context, it was
noted, that Ratio Petroleum is seeking a farm-down of participating interests
and operatorship and is already in discussions with major oil companies with a
view to bringing a new entrant or entrants to the block.
In this regard, it is also of note that the two deepwater blocks (D1 &
D2), immediately adjacent to the Kaieteur block, have each been the subject of
at least one application during the recent Guyanese Bid Round which offered
acreage under less benign fiscal terms than the original Kaieteur Block terms.
As of 30 June 2023, the Kaieteur Block is operated by an ExxonMobil
subsidiary, Esso Production & Exploration Guyana Limited (35%), with CEL
(20%), RGL (25%) and a subsidiary of Hess Corporation, Hess Guyana (Block B)
Exploration Limited (20%) as partners. Subsequent to the announcement on 27
September 2023 of the withdrawal from the Kaieteur Block of the ExxonMobil and
Hess subsidiaries and upon the reassignment of their interests to the original
Kaieteur Licence holders, the Kaieteur Licence interests will be as follows:
RGL 50% and operator; CEL 50%. Westmount retains a holding of approximately
5.3% of the issued share capital of Cataleya Energy Corporation ("CEC") the
parent company of CEL and circa 0.04% of the issued share capital of Ratio
Petroleum Energy Limited Partnership ("Ratio Petroleum") the ultimate holding
entity with respect to RGL.
Canje Block (offshore Guyana)
The first well on the Canje block, Bulletwood-1, was spudded on 31 December
2020 using the Stena Carron drillship and was completed in early March 2021.
The well was safely drilled in a water depth of 2,846 metres to its planned
target depth of 6,690 meters. The primary target in the well was a Campanian
age confined channel complex. The well encountered quality reservoirs but
non-commercial hydrocarbons. There has been limited disclosure of the well
results to date as detailed analysis of the data collected is ongoing.
However, the initial results confirm the presence of the Guyana-Suriname
petroleum system and the potential prospectivity of the Canje Block.
Initial drilling operations at the second well on the Canje block, Jabillo-1,
commenced on 14 March 2021 using the Stena Carron drillship. Previously
published information indicated that Jabillo-1 was targeting a Late
Cretaceous, Liza-age equivalent, basin floor fan. After interruption for a
brief period of maintenance work on the drillship drilling operations at
Jabillo-1 recommenced circa 5 June 2021 and were completed in early July. The
well was safely drilled in a water depth of 2,903 metres to its planned target
depth of 6,475 meters. The well did not encounter commercial hydrocarbons.
The third well on the Canje block, Sapote-1, was spudded circa 29 August 2021,
using the Stena DrillMAX drillship, and reached TD in late October 2021. This
well is located in the southeast of the Canje Block, approximately 60kms north
of the Campanian and Santonian Maka Central-1 stacked pay discovery. The well
was safely drilled in a water depth of 2,549 metres to a total depth of 6,758
meters. It encountered non-commercial hydrocarbons in one of the deeper
exploration targets.
Subsequent to the completion of the first phase of drilling on block the focus
of the Canje JV partners has been on the analysis and assimilation of the 2021
drilling results and data gathering program, the reprocessing and
re-interpretation of the 3D seismic data, and the high-grading of the
Cretaceous prospect inventory including the prospects in the deeper emerging
Santonian-Cenomanian plays.
In August 2021 the Canje operator submitted an application for Environmental
Authorisation to the Guyanese Environmental Protection Agency ("EPA") seeking
approval to undertake a follow-on drilling campaign of up to twelve wells.
Although the EPA initially declared that the project was exempt from the
requirement of an Environmental Impact Assessment (EIA), following appeals
submitted against the EPA's decision, it was subsequently determined in August
2022 that an EIA would be required to assess the potential 'collective
impacts' of the proposed drilling campaigns on Canje and the contiguous
blocks.
On 11 September 2023, the operator filed a Cumulative Impact Assessment
("CIA") for the Canje Block with the EPA. This CIA report indicates that
exploration drilling on the Canje Block could potentially recommence in the
second quarter of 2024, though this guideline has not yet been confirmed by
JHI or any of the Canje partners.
Westmount holds an indirect interest in the Canje Block as a result of its
circa 7.2% interest in the issued share capital of JHI Associates Inc.
("JHI"), as of 30 June 2023. The company also holds an additional indirect
interest in the Canje Block as a result of its shareholding in Eco (Atlantic)
Oil and Gas Ltd. ("EOG") and following the investments in JHI Associates Inc.
("JHI") announced by EOG on 28 June 2021 and 19 January 2022.
On 25 September 2023, Argos Resources Limited ("Argos") announced the
completion of a transaction with JHI which resulted in the acquisition of
operatorship and 100% working interest in North Falklands Basin Production
Licence PL001 by JHI in return for a consideration of 8,467,820 JHI Common
Shares ("the Consideration Shares") and £303,500 in cash. It was stated that
these Consideration Shares are expected to represent approximately 9.3 per
cent of the enlarged share capital of JHI following completion of the
transaction. Furthermore, it was also announced, that following the passing of
resolutions at the Argos general meeting held on 22 September 2023, that Argos
had been placed into members voluntary liquidation and that Argos having
agreed with certain creditors to settle those liabilities using Consideration
Shares, that approximately 7.9 million of the Consideration Shares would be
available for distribution on a pro-rata basis to Argos' shareholders on the
register at the relevant date. Given Westmount's holding of 1 million shares
in Argos, on the relevant date, it is estimated that the net effect of this
transaction on Westmount's holding in JHI will be to increase the number of
JHI shares held by Westmount by approximately 33,600 shares and to reduce
Westmount's interest in the enlarged issued share capital of JHI to circa
6.24%.
Subsequent to the initial EOG transaction and a previous 2018 farm-out to
Total, JHI was fully carried/funded for the 2021 three well drilling campaign
and is also funded for additional drilling, with a reported USD$19.7M in cash
and cash equivalents as of 31 December 2021(17).
The Canje Block is currently operated by an ExxonMobil subsidiary, Esso
Exploration & Production Guyana Limited (35%), with TotalEnergies E&P
Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and Mid-Atlantic Oil
& Gas Inc. (12.5%) as partners.
Orinduik Block (offshore Guyana)
Westmount continues to hold an indirect interest in the Orinduik Block as a
result of its circa 0.4% interest in the issued share capital of Eco
(Atlantic) Oil and Gas Ltd. ("EOG"). Over the last 24 months the focus of the
Orinduik Block JV partners has continued to be on the analysis and
assimilation of the 2019/20 drilling results and data gathering program, the
reprocessing and re-interpretation of the 3D seismic data, and the
high-grading of the Cretaceous light oil prospect inventory with a view to
target selection for the next drilling campaign on the Orinduik Block.
However, progress towards drilling on the block appeared to be stymied during
this period due to the diverging strategies between the operator and some of
the JV partners with respect to exploration investment.
On 10 August 2023, EOG announced that it had signed a Sale Purchase Agreement
("SPA") pursuant to which its wholly owned subsidiary, Eco Guyana Oil and Gas
(Barbados) Limited ("Eco Guyana"), will acquire a 60% Operated Interest in the
Orinduik Block, offshore Guyana, through the acquisition of Tullow Guyana B.V.
("TGBV"), a wholly owned subsidiary of Tullow Oil Plc. ("Tullow") in exchange
for an initial payment of USD$700,000 cash and a series of contingent payments
based upon a commercial discovery outcome and subsequent success case
development milestones.
The operated interest includes the Jethro and Joe Tertiary oil discoveries,
made during the initial drilling campaign in 2019, which are currently
considered non-commercial. As of 31 December 2022, the gross 2C resource
attributable to the Orinduik 60% operated interest amounted to 47.7mmbls. Upon
completion of the transaction the stated intention of EOG, as operator and 75%
interest holder, is to revitalise the exploration process(17) and attract new
partners with a view to drilling prospects in the more prolific Cretaceous
play, which remains unexplored on the Orinduik Block.
As of 30 June 2023, the Orinduik Block is operated by Tullow Guyana B.V.
(60%), with TOQAP Guyana B.V. (25%) and Eco (Atlantic) Guyana Inc. (15%) as
partners. TOQAP Guyana B.V. is jointly owned by TotalEnergies E&P Guyana
B.V. (60%) and Qatar Petroleum (40%). Post period end and subject to the
completion of the transaction announced by EOG on 10 August 2023, EOG will
become the operator and will hold an aggregate 75% Participating Interest in
the block via its subsidiaries Eco Guyana and Eco (Atlantic) Guyana Inc. TOQAP
Guyana B.V will continue to hold a Participating Interest of 25%.
EOG reported its cash and cash equivalents to be USD$4.7M at 30 August 2023.
Orange Basin - offshore Namibia and South Africa
Blocks 2913B & 2912 (PEL 56 & PEL 91) (offshore Namibia)
Westmount holds an indirect interest in Blocks 2913B and 2912 via its
shareholding in Africa Oil Corp ("AOC"). The purchase of this shareholding was
announced on 9 June, 2023 and it was acquired with a view to offering
shareholders liquid exposure to the near field exploration and appraisal
drilling and testing program that is underway on the giant Venus light oil and
associated gas discovery in the Orange Basin. AOC is the only publicly-listed
independent oil and gas company with an effective economic interest in this
accumulation (effective interest of 6.2% and 5.9% in Blocks 2913B & 2912,
respectively), which is understood to be the largest oil discovery made
globally in 2022. AOC holds its effective interest in these blocks via its
circa 31% shareholding in Impact Oil & Gas Limited ("Impact") a privately
owned, Africa-focused, exploration company. Impact (through its wholly owned
subsidiary, Impact Oil and Gas Namibia (Pty) Ltd.) holds a 20% working
interest ("WI") in Block 2913B - with partners TotalEnergies (40% operator),
QatarEnergy (30%) and Namcor (10%) - and an 18.89% WI in Block 2912 - with
partners TotalEnergies (37.78% operator), QatarEnergy (28.33%) and Namcor
(15%).
On 24 February 2022, Impact announced that the play-opening discovery well
Venus-1X, drilled on Block 2913B, had encountered a high-quality, light
oil-bearing sandstone reservoir of Lower Cretaceous age, with 84 meters of net
oil pay(16).
On 22 February 2023, Impact announced the imminent commencement of a
multi-well drilling and testing program in Blocks 2913B and 2912, using the
Tungsten Explorer drillship and the Deepsea Mira semi-submersible rig,
targeting up to 4 wells, including the re-entry, sidetracking and testing of
the Venus-1X discovery well, the drilling and testing of the Venus-1A
appraisal well, the drilling and potential testing of the Nara-1X exploration
well on Block 2912 and a contingent appraisal well at Nara-1A in the success
case. Separately, it was reported that TotalEnergies the operator was spending
50% of its global exploration budget for 2023 on this project(18).
Updates on the progress of this multi-well program were provided by AOC and
Impact on 28 September 2023 and via the TotalEnergies Investor Day
presentations on 27 September 2023. These updates heralded a major milestone
in the appraisal of the giant Venus light oil discovery with the successful
re-entry, sidetracking and drill stem testing ("DST") of the Venus-1X
discovery well, which should contribute to the progression of development
studies supporting the first commercial development in Block 2913B(11). With
the operator expressing sufficient confidence to declare that there will be an
oil field development at Venus, though the size has yet to be determined, this
implies that the prerequisite permeability and well productivity has been
demonstrated by the initial DST flow test of the Cretaceous reservoir at
Venus-1X, which augurs well for the forward appraisal and exploration program
on Block 2913B.
The update also confirmed the successful drilling, coring and logging of the
first appraisal well, Venus-1A, which was drilled approximately 13km north of
the Venus-1X discovery well, using the Tungsten Explorer drillship. Venus-1A
has subsequently been re-entered in early October and is currently undergoing
a DST program using the Deepsea Mira rig. In addition, it was reported that
the Nara-1X exploration well, drilled on Block 2912, appeared to be oil
bearing but in poor quality reservoir facies and was deemed
non-commercial(11). Following the completion of operations at Nara-1X the
Tungsten Explorer drillship has been mobilized to drill the substantial
Mangetti-1X prospect, located on Block 2913B, at the northern end of the giant
Venus light oil accumulation. The operator also indicated that the immediate
program included additional 3D seismic acquisition to completely cover the
acreage and the potential for a final appraisal well on the north of Venus
itself(11).
Block 2B (offshore South Africa)
Westmount holds an indirect interest in Block 2B via its shareholding in EOG.
On 18 November 2022, it was reported that the Gazania-1 well, on Block 2B in
the Orange Basin offshore South Africa, had reached target depth of 2,360m but
did not show evidence of commercial hydrocarbons. The well was subsequently
plugged and abandoned with further analysis of the Gazania-1 well data, and
the existing AJ-1 light oil discovery, being undertaken by EOG to determine
next steps on the Block(17). On 15 November 2022, EOG, on behalf of the Block
2B JV partners, submitted a Production Right Application with respect to the
AJ-1 discovery, to the Petroleum Agency of South Africa.
Block 3B/4B (offshore South Africa)
Westmount holds an indirect interest in Block 3B/4B via its shareholdings in
AOC and EOG. On 8 March 2023, following the completion of the reprocessing of
2,200 km(2) of 3D seismic, AOC reported the results of an independent review
of Block 3B/4B prospective resources which had been undertaken by RISC
Advisory (UK) Limited ("RISC")(19). The RISC analysis of the licence
identified a total Unrisked Gross P50 Prospective Resource of approximately 4
billion barrels of oil equivalent ("BOE") in 24 prospects, with individual
prospect probabilities of success ranging from 11% to 39%.
Subsequent to a Letter of Intent announced by EOG on 11 July 2023 and the
entry into an Assignment and Transfer Agreement on 14 July 2023, EOG agreed to
farm out a 6.25% Participating Interest in Block 3B/4B, offshore South Africa
to AOC for up to US$10.5 million in cash, payable via a series of contingent
milestone payments. Subject to the completion of this transaction the Block
3B/4B Licence holders will be: Africa Oil SA Corp a wholly owned subsidiary of
AOC (26.25%, operator), Azinam Limited a wholly owned subsidiary of EOG (20%)
and Ricocure (Proprietary) Limited (53.75%). EOG also reported during the
period that a separate collaborative farm-out process was underway on Block
3B/4B, with up to 55% gross working interest available from the JV partners,
and with a view to a two well drilling campaign on the block. In this
regard, it was also reported that the Environmental Authorisation process for
drilling is underway with respect to prospects defined on 3D seismic in a
high-graded area in the north of Block 3B/4B.
Investment portfolio summary
As of 30 June 2023, Westmount had a cash balance of £0.48M and is debt free.
On 9 June 2023, Westmount announced that it had purchased 300,000 shares in
Africa Oil Corp. ("AOC") representing approximately 0.065% of the issued
common shares in AOC as of 28 August 2023.
On 30 June 2023, Westmount held a total of 5,651,270 shares in JHI,
representing approximately 7.2% of the issued common shares in JHI as of 31
December 2021. Subsequent to balance sheet date and the completion of the
Argos-JHI transaction announced on 25 September 2023, the entry into members
voluntary liquidation by Argos and the planned pro rata distribution of JHI
Consideration Shares to Argos shareholders, it is estimated that Westmount
will hold circa 5,684,866 shares in JHI, representing approximately 6.24% of
the enlarged issued share capital of JHI.
On 9 January 2023, Westmount reported that it had elected to participate in
the pro rata Return of Capital Transaction ("ROC Transaction") offered to the
shareholders of Cataleya Energy Corporation ("CEC") which reduced the number
of outstanding common shares ("Common Shares") in CEC in issue by 16%.
The ROC Transaction was structured such that each Participating Shareholder
effectively received, for each Common Share held prior to the transaction that
is ultimately cancelled pursuant to the ROC Transaction, an amount equal to
approximately USD$3.906 per share. The aggregate amount returned to
participating CEC shareholders via the ROC Transaction was approximately USD
$6,720,000, with these funds being provided to CEC through the issuance of
incremental convertible loan notes to a certain noteholder (the "Noteholder")
that previously advanced USD$35,000,000 to CEC in April 2020.
Prior to the ROC Transaction, Westmount held a total of 567,185 Common Shares
in CEC, representing approximately 5.28% of the issued common shares in CEC.
Post completion of the ROC Transaction, on 6 January 2023, Westmount holds a
total of 474,816 Common Shares in CEC, retaining approximately 5.26% of the
issued common shares of CEC outstanding post the ROC transaction. Westmount
also received a cash return of USD$355,954 (net of expenses).
Westmount continues to hold 1,500,000 shares in EOG, representing
approximately 0.4% of the common shares in issue as of 2 August 2023.
Westmount continues to hold 89,653 shares in Ratio Petroleum representing
approximately 0.04% of the issued share capital.
On 30 June 2023, Westmount retained a legacy holding of 1,000,000 shares in
Argos, representing approximately 0.4% of the issued common shares in Argos.
Subsequent to the Argos-JHI transaction announced on 25 September 2023, the
entry into members voluntary liquidation by Argos and the cancellation from
admission to trading on AIM of Argos shares from 26 September 2023, it is
anticipated that Westmount will receive circa 33,600 JHI shares from Argos by
way of a post liquidation pro rata distribution of assets to Argos
shareholders.
The complete investment portfolio is summarised in Table 1. The reported
financial loss for the period is primarily made up of a non-cash loss on
financial assets held at fair value through the profit and loss, some of which
is as a result of Foreign Exchange movements on the portfolio Investments when
valued at the period end.
Summary/Outlook
The oil and gas exploration sector continues to be a challenging space for
investors in the context of volatile oil prices, a weakening global
macroeconomic outlook, conflicting peak demand scenarios and the vagaries of
energy transition politics. Nevertheless, in common with the broader energy
spectrum, risk of underinvestment, relative to what is needed to meet forecast
energy demand across a range of 'net zero' demand trajectories, remains a key
theme for the oil and gas business. Recent improvement in the financial
performance of the upstream sector combined with a drive by the bigger
companies to high-grade their portfolios with higher return, lower carbon
(Scope 1 and 2 emissions), oil and gas prospects is likely to contribute to
increased exploration spending in the near term. Spending in deepwater and
ultra-deepwater areas is forecast to grow most rapidly with the NOCs and
majors continuing to dominate while Mid-Caps retreat from this space.
Exploration 'hotspots' in the deepwater Guyana-Suriname Basin, offshore Guyana
and the Orange Basin, offshore Namibia are two areas that are well positioned
to capture their share of this increased exploration spending.
Westmount's strategy continues to be one of seeking value creation for
shareholders via exposure to high impact exploration and appraisal drilling
programs. With respect to offshore Namibia, a recent update by our investee,
AOC, confirms our view that the Orange Basin is a major emerging, prolific,
hydrocarbon province which offers Westmount shareholders immediate exposure to
high impact drilling outcomes, including the ongoing Mangetti-1 exploration
well. The update also heralded a major milestone in the appraisal of the giant
Venus light oil discovery with the successful re-entry, sidetracking and drill
stem testing ("DST") of the Venus-1X discovery well and the successful
drilling, coring and logging of the first appraisal well, Venus-1A, a 13km
step-out to the north of the Venus-1X discovery well. Venus-1A has
subsequently been re-entered in early October and is currently undergoing a
DST program. Newsflow from the results of this DST program and the drilling of
Mangetti-1 is anticipated in Q4 2023.
With respect to offshore Guyana, we note the September 2023 filing by the
operator ExxonMobil of a Cumulative Impact Assessment ("CIA") for the Canje
Block with the EPA. This CIA report indicates that exploration drilling on the
Canje Block could potentially recommence in the second quarter of 2024, though
this guideline has not yet been confirmed by our investee, JHI, or any of the
Canje partners. The exit of ExxonMobil and Hess from the Kaieteur Block is a
setback with respect to drilling timeframes for Kaieteur, though we are
encouraged that Ratio Petroleum is already reported to be in discussions with
major oil companies with a view to bringing in a new deepwater operator to the
block. In this regard, it is also of note that the two deepwater blocks (D1
& D2), immediately adjacent to the Kaieteur block, have each been the
subject of at least one application during the recent Guyanese Bid Round which
offered acreage under less benign fiscal terms than the original Kaieteur
Block terms. The recently announced entry of Chevron to Guyana, via its
acquisition of Hess Corporation, may also bring its own dynamic with respect
to exploration drilling in the deepwater area of the Guyana-Suriname Basin.
Westmount is well capitalised with a minimal cost base and investment exposure
to some high impact exploration and appraisal drilling opportunities offshore
Guyana and offshore Namibia. Our primary investee companies CEC, JHI and EOG
are currently well funded though, in some cases, the shifting priorities of
the incumbent majors and Mid-Caps is likely to require new farm-ins prior to
drilling. In this changing landscape, some of our investees are also likely to
consider portfolio diversification and possible consolidation manoeuvres as
part of their risk management strategies. In all cases, line of sight to
indirect participation in high impact drilling remains the key investment
objective for Westmount.
GERARD WALSH
Chairman
8 November 2023
Notes
(1)DNV Energy Transition Outlook 2023
(2)OPEC World Oil Outlook 2023
(3)IEA Oil 2023 - Analysis and Forecast to 2028
(4)Wood Mackenzie - Doing More with Less - Is there enough upstream
investment? - July 2023
(5)Hess Corporation presentation 7 September 2023 - Barclays CEO Energy-Power
Conference
(6)Wood Mackenzie Insight - Exploration quietly recovering - August 2023
(7)Wood MacKenzie - Global-deepwater-production-to-increase-60% - November
2022
(8)Hess Corporation Press Releases - Estimated Results for First, Second &
Third Quarters 2023
(9)CGX Energy Inc. News Releases 28 June 2023, 13 June 2023, 9 May 2022, 1
March 2023.
(10)APA Corporation News Releases - 21 February, 21 June and 23 August 2022; 2
August 2023.
(11)TotalEnergies 2023 Strategy & Outlook - Investor Day Presentations
& Transcript 27 September 2023
(12)Hess 3(rd) Quarter 2022 Conference Call Remarks.
(13)Shell Press Releases 22 April 2022 & 6 March 2023
(14)https://www.upstreamonline.com/exclusive/-like-a-train-oil-flows-at-supercharged-rate-from-shell-s-ground-breaking-namibia-probe/2-1-1450289
(https://www.upstreamonline.com/exclusive/-like-a-train-oil-flows-at-supercharged-rate-from-shell-s-ground-breaking-namibia-probe/2-1-1450289)
(15)https://www.reuters.com/article/namibia-oil-idUKL8N3A41HS
(https://www.reuters.com/article/namibia-oil-idUKL8N3A41HS)
(16)https://impactoilandgas.com/major-light-oil-discovery-offshore-namibia/
(https://impactoilandgas.com/major-light-oil-discovery-offshore-namibia/)
(17)Eco (Atlantic) Oil & Gas Ltd. News Releases 14 March 2022, 27 February
2023 and 19 August 2023.
(18)https://www.upstreamonline.com/exploration/totalenergies-throws-half-of-this-years-exploration-budget-into-potential-new-golden-block/2-1-1400964
(https://www.upstreamonline.com/exploration/totalenergies-throws-half-of-this-years-exploration-budget-into-potential-new-golden-block/2-1-1400964)
(19)https://africaoilcorp.com/news/africa-oil-announces-new-competent-persons-report-122876/
(https://africaoilcorp.com/news/africa-oil-announces-new-competent-persons-report-122876/)
For further information, please contact:
Westmount Energy
Limited
www.westmountenergy.com (http://www.westmountenergy.com)
David King,
Director
Tel: +44 (0) 1534 823000
Cavendish Securities plc (Nomad and Broker) Tel: +44 (0) 20 7397 8900
Neil McDonald / Pete Lynch
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
The Directors present their annual report and the audited financial statements
of Westmount Energy Limited (the "Company") for the year ended 30 June 2023.
PRINCIPAL ACTIVITIES
The principal activity of the Company is, and continues to be, an energy
investment company. Development of the Company's activities and its prospects
are reviewed in the Chairman's Review on pages 3 to 13.
The Company was incorporated in Jersey on 1 October 1992 under the Companies
(Jersey) Law 1991, as amended, and is a public company with registered number
53623. The Company is listed on the London Stock Exchange Alternative
Investment Market ("AIM"). On 1 December 2020 the Company commenced
cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol
"WMELF".
DIRECTORS AND DIRECTORS' INTERESTS
The Directors who served during the year and subsequently to the date of this
report were as follows:
Shares held at Options held at
30 June 2023 30 June 2023
GWalsh (Chairman) 11,933,565 500,000
TPO'Gorman 4,650,000 250,000
DCorcoran 5,250,000 1,250,000
DRKing - 250,000
RESULTS AND DIVIDENDS
The result for the year is set out on page 24 in the Statement of
Comprehensive Income. The Directors do not recommend the payment of a dividend
in respect of these financial statements (2022: £Nil).
During the prior year, Ukraine was invaded by the Russian military. This had
an immediate impact on the global economy due to sanctions being imposed on
Russia. Oil and gas prices have risen significantly and there have been
restrictions on the exportation of goods from both the Ukraine and Russia. In
preparing these financial statements, these uncertainties have been considered
throughout. The Directors will continue to monitor the situation on a regular
basis.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman, age 60, a Swiss resident, is a member of the Chartered
Institute of Management Accountants and has been involved in financing oil and
gas companies for over 20 years. Mr Walsh maintains his knowledge and skills
via direct contact with senior industry investors and other operators, and via
monitoring of significant market activities within the global energy sector.
David R King, age 65, a Jersey resident, is a Fellow of the Institute of
Chartered Accountants in England and Wales and has over 25 years' experience
in capital markets and cross border structuring gained from senior positions
in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong,
Luxembourg and Jersey. He is an experienced professional Non-Executive
Director and is regulated personally by the Jersey Financial Services
Commission. He maintains his knowledge and skills via fulfilment of regular
continuing professional development obligations and by close monitoring of
significant market activities within the sector. Mr King acts as an
independent director and oversees the efficient operation of Company
Secretarial, Registrar and Administrative operations of the Company.
Thomas P O'Gorman, age 71, a Northern Ireland resident, is a long term
investor in the resource sector and is the former Chairman of Cove Energy Plc
(formerly Lapp Platts Plc) who has been involved in financing oil and gas
companies for over 40 years. Mr O'Gorman maintains his knowledge and skills
via direct contact with senior industry investors and other operators, and via
monitoring of significant market activities within the global energy sector.
Dermot Corcoran, age 64, a Republic of Ireland resident, is a petroleum
geologist and geophysicist, with more than 30 years' experience working with
both major and minor hydrocarbon exploration companies globally. Mr Corcoran
has wide experience in technical and commercial aspects of petroleum
exploration and production, gained from employment and investment experience
in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA.
Mr Corcoran maintains his knowledge and skills via direct contact with senior
industry investors and other operators, attendance and engagement at industry
conferences and seminars and via monitoring of significant market activities
within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited, has
indicated its willingness to continue in office, and a resolution that it is
re-appointed will be proposed at the next annual general meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Jersey Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRS) and applicable law. Under
Company law the Directors must prepare financial statements that give a true
and fair view of the state of affairs of the Company and of the profit or loss
of the Company for that period. In preparing these financial statements, the
Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether the financial statements have been prepared in
accordance with IFRS as adopted by the European Union; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit information of
which the Company's auditor is unaware and each Director has taken all the
steps that he ought to have undertaken as a director in order to make himself
aware of any relevant audit information and to establish that the Company's
auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website. The
Company's website is maintained in compliance with AIM Rule 26 and the
applicable OTCQB Market standards.
Legislation in Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the above
requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
8 November 2023
RESULTS AND DIVIDENDS
The result for the year is set out on page 24 in the Statement of
Comprehensive Income. The Directors do not recommend the payment of a dividend
in respect of these financial statements (2022: £Nil).
During the prior year, Ukraine was invaded by the Russian military. This had
an immediate impact on the global economy due to sanctions being imposed on
Russia. Oil and gas prices have risen significantly and there have been
restrictions on the exportation of goods from both the Ukraine and Russia. In
preparing these financial statements, these uncertainties have been considered
throughout. The Directors will continue to monitor the situation on a regular
basis.
DIRECTORS' BIOGRAPHICAL INFORMATION
Gerard Walsh, Chairman, age 60, a Swiss resident, is a member of the Chartered
Institute of Management Accountants and has been involved in financing oil and
gas companies for over 20 years. Mr Walsh maintains his knowledge and skills
via direct contact with senior industry investors and other operators, and via
monitoring of significant market activities within the global energy sector.
David R King, age 65, a Jersey resident, is a Fellow of the Institute of
Chartered Accountants in England and Wales and has over 25 years' experience
in capital markets and cross border structuring gained from senior positions
in a number of offshore jurisdictions, notably the Cayman Islands, Hong Kong,
Luxembourg and Jersey. He is an experienced professional Non-Executive
Director and is regulated personally by the Jersey Financial Services
Commission. He maintains his knowledge and skills via fulfilment of regular
continuing professional development obligations and by close monitoring of
significant market activities within the sector. Mr King acts as an
independent director and oversees the efficient operation of Company
Secretarial, Registrar and Administrative operations of the Company.
Thomas P O'Gorman, age 71, a Northern Ireland resident, is a long term
investor in the resource sector and is the former Chairman of Cove Energy Plc
(formerly Lapp Platts Plc) who has been involved in financing oil and gas
companies for over 40 years. Mr O'Gorman maintains his knowledge and skills
via direct contact with senior industry investors and other operators, and via
monitoring of significant market activities within the global energy sector.
Dermot Corcoran, age 64, a Republic of Ireland resident, is a petroleum
geologist and geophysicist, with more than 30 years' experience working with
both major and minor hydrocarbon exploration companies globally. Mr Corcoran
has wide experience in technical and commercial aspects of petroleum
exploration and production, gained from employment and investment experience
in Europe, North Africa, West Africa, Kurdistan, Syria, Pakistan and the USA.
Mr Corcoran maintains his knowledge and skills via direct contact with senior
industry investors and other operators, attendance and engagement at industry
conferences and seminars and via monitoring of significant market activities
within the global energy sector.
SECRETARY
The Secretary of the Company is Stonehage Fleming Corporate Services Limited.
AUDITOR
The auditor, Moore Stephens Audit & Assurance (Jersey) Limited, has
indicated its willingness to continue in office, and a resolution that it is
re-appointed will be proposed at the next annual general meeting.
STATEMENT OF DIRECTORS' RESPONSIBILITIES WITH REGARD TO THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
Jersey Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRS) and applicable law. Under
Company law the Directors must prepare financial statements that give a true
and fair view of the state of affairs of the Company and of the profit or loss
of the Company for that period. In preparing these financial statements, the
Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether the financial statements have been prepared in
accordance with IFRS as adopted by the European Union; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
(Jersey) Law 1991. They are also responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
As far as the Directors are aware, there is no relevant audit information of
which the Company's auditor is unaware and each Director has taken all the
steps that he ought to have undertaken as a director in order to make himself
aware of any relevant audit information and to establish that the Company's
auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website. The
Company's website is maintained in compliance with AIM Rule 26 and the
applicable OTCQB Market standards.
Legislation in Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors confirm that they have complied with all of the above
requirements in preparing these financial statements.
On behalf of the Board
D R KING
Director
8 November 2023
CORPORATE GOVERNANCE
The Board have adopted the Quoted Companies Alliance Corporate Governance Code
("the QCA Code") following the London Stock Exchange's requirement for AIM
listed companies to adopt and comply with a recognised corporate governance
code.
Strategy and Business Model
The strategy of the Company is to invest in and provide follow on capital to
small and medium sized companies which have significant growth possibilities
operating in the oil and gas sector. Members of the Board have specialist
knowledge and experience in the upstream sector of the oil and gas industry
(gained from extensive investing activity over a number of decades) allowing
them to identify projects and growth companies with potentially higher
returns, commensurate with acceptable levels of risk. The Company undertakes
extensive due diligence on potential investment opportunities and monitors
performance of its investments via close contact with the companies concerned
and analysis of their public announcements and presentations. In common with
other investment companies in this sector, access as a minority shareholder to
projects and valuable investments is challenging but the Board is confident of
its ability to continue to source attractive investment opportunities given
close relationships with a number of companies and their management teams, and
recognition of the Board's experience and strong network.
Shareholder Relations
The Company engages closely with its principal shareholders, a number of whom
are Directors of the Company, primarily via face-to-face meetings and
publishes announcements of significant activity consistent with market
requirements. Shareholders receive annual and half-year financial statements
and are invited to the Company's Annual General Meeting. Contact details for
the Company are maintained on the website and on Regulatory News Service
announcements. The Board seeks to build strong relationships with its
institutional shareholders which are managed by the Chairman and supported by
other members of the Board.
Gerard Walsh, Chairman, and Dermot Corcoran, Director, are primarily
responsible for shareholder liaison, and can be contacted via the Contact Page
on the Company's website.
Stakeholder and Social Responsibilities
The Board has identified its key stakeholders as being its shareholders and
investee companies, given it has no employees and a small range of contracted
service providers. It maintains contact with shareholders, of whom a
significant proportion are Directors, via Regulatory News Service and periodic
feedback from these parties. Contact with investee companies is operated via
the Chairman and individual Board directors responsible for the relevant
investment recommendation, and is geared to key operational, project and
transactional cycles identified for the company concerned.
Risk Management
The Company actively monitors and manages risk in its activities, principally
through oversight and operation of its investment portfolio. The Company
identifies key risks in all of its investments during the selection and due
diligence cycle, and subsequent recommendations for investment by the Company
consider for each proposal a range of risks and mitigating factors.
Identification of these risks is achieved by direct engagement with the
companies in which Westmount seeks to invest, close analysis of their market
opportunities and threats, combined with detailed knowledge of the market
sector where they operate and their competitors.
Board Composition, Evaluation and Decision Making
The Board comprises three shareholder Directors (including the Chairman Gerard
Walsh) and one Non-Executive Director (David King) resident in Jersey, who is
considered to be independent.
The Company deviates from the requirements of the QCA Code in that it has only
one independent non-executive director. The Directors consider that the
structure of the Board is appropriate and proportionate for the business at
this stage of the Company's growth, and that the Independent Director, in
conjunction with the Company's Nominated Adviser, provides appropriate
challenge to the executive directors on all corporate governance matters. The
Board intends to keep all aspects of its corporate governance - independence
and the balance of executive and non-executive roles in particular - under
review going forward.
Each of the four directors has considerable experience in their respective
fields and act collectively in all decision making of the Company. The Board
is satisfied that it has a suitable balance between independence on the one
hand and knowledge of the Company's activities, to allow it to properly
discharge its responsibilities and duties. Directors are expected to use their
judgement and experience to challenge and assess the appropriateness of
operations and decision making at all times.
The Board has formally met two times this financial year and Directors each
dedicate between 12 and 150 days' time to the Company per annum, including
informal contact with other Board members and advisors, and attendance at the
Annual General Meeting.
The Board regularly takes advice from its Nominated Advisor, Cavendish
Securities plc, and other external advisors (principally its external lawyers)
in relation to periodic investment opportunities and fund raising.
The Board completes an annual self-evaluation of its performance based on
externally determined guidelines appropriate to the composition of the Board
and the Company's operation, including Board Sub Committees. The scope of the
self-evaluation exercise will be re-assessed each year to ensure appropriate
depth and coverage of the Board's activities consistent with corporate best
practice. The Board has adopted a board effectiveness questionnaire, which
assesses the composition, processes, behaviours and activities of the board
through a range of criteria, including board size and independence, mix of
skills and experience, and general corporate governance considerations in line
with the QCA code.
Given the stage of the business' maturity, the responsibilities of a
nomination committee are delegated to the Board, and there are no formal
succession planning processes in place. The Board intends to keep this under
review as the business develops.
Corporate Culture
Westmount Energy supports the growing awareness of social, environmental and
ethical matters when considering business practices. These statements provide
an outline of the policies in place that guide the Company and its employees
when dealing with social, environmental and ethical matters in the workplace.
Code of Conduct
Westmount Energy maintains and requires the highest ethical standards in
carrying out its business activities in regards to dealing with gifts,
hospitality, corruption, fraud, the use of inside information and
whistle-blowing.
Westmount Energy maintains a zero-tolerance policy towards bribery and
corruption.
Equal Opportunity and Diversity
Westmount Energy promotes and supports the rights and opportunities of all
people to seek, obtain and hold employment without discrimination.
It is our policy to make every effort to provide a working environment free
from bullying, harassment, intimidation and discrimination on the basis of
disability, nationality, race, sex, sexual orientation, religion or belief.
Joint Venture Partners, Contractors and Suppliers
Westmount Energy is committed to being honest and fair in all its dealings
with partners, contractors and suppliers.
Procedures are in place to ensure that any form of bribery or improper
behaviour is prevented from being conducted on Westmount Energy's behalf by
joint venture partners, contractors and suppliers. Westmount Energy also
closely guards information entrusted to it by joint venture partners,
contractors and suppliers, and seeks to ensure that it is never used
improperly.
Operating Responsibility and Continuous Improvement
Westmount Energy adopts an environmental policy which sets standards that meet
or exceed industry guidelines and host government regulations. This is
reviewed on a regular basis. Wherever we operate we will develop, implement
and maintain management systems for sustainable development that will strive
for continual improvement.
Westmount Energy is committed to maintaining and regularly reviewing its
Health and Safety and Environmental Policies.
Periodic feedback from stakeholders, as described in relation to Stakeholder
and Social Responsibilities (above), allows the Board to monitor the culture
of the Company, as well as its ethical values and behaviours.
Governance Structures
The Board operates to manage and direct the affairs of the Company via close
contact between Board members and through both regular scheduled and ad-hoc
Board meetings. The Board aims to meet regularly with a timetable set by the
external Company Secretary with formal agendas and papers delivered in advance
supporting key matters for consideration or approval. Additionally, contact is
maintained between the directors via email and telephone given the geographic
separation of the Board.
Mr Walsh as Chairman is responsible for setting the strategy of the Company
and maintaining performance of the Board in line with the broad objectives set
in that strategy. He is responsible for liaison with key stakeholders,
including shareholders and prospective investee companies, and also with
advisers and regulatory authorities.
Mr King, as a Jersey resident, maintains close contact with the Company
Secretary and other contracted service providers from Jersey. The Board does
not operate separate sub-committees (Audit, Remuneration or Nomination) given
its small size and close contact for key decisions. The Company does not plan
to establish new sub-committees for the foreseeable future.
The Board retains full authority for the Company such that all decisions on
behalf of the Company are reserved for the Board.
Communication with Stakeholders
The Company communicates with shareholders through the Annual Report and
Audited Financial Statements, annual and half year results announcements, the
Annual General Meeting, and periodic meetings with significant institutional
shareholders and analysts.
Corporate information (including all Company publications and announcements)
is available to all shareholders, prospective investors and the public and is
maintained on the Company's website, www.westmountenergy.com
(http://www.westmountenergy.com) .
In the last 12 months there were no votes of shareholders where a significant
proportion voted against a resolution.
INDEPENDENT AUDITOR'S REPORT
TO THE SHAREHOLDERS OF WESTMOUNT ENERGY LIMITED
Opinion
We have audited the financial statements of Westmount Energy Limited (the
'Company') as at and for the year ended 30 June 2023 which comprise the
Statement of Comprehensive Income, the Statement of Financial Position,
Statement of Changes in Equity, the Statement of Cash Flows and the notes to
the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their
preparation is International Financial Reporting Standards ('IFRSs') as
adopted by the European Union and the requirements of the Companies (Jersey)
Law 1991.
In our opinion, the financial statements:
· give a true and fair view of the state of the Company's affairs as at
30 June 2023 and of its loss for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by
the European Union; and
· have been prepared in accordance with the requirements of the
Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report.
We are independent of the Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in Jersey,
including the Financial Reporting Council's Ethical Standard as applied to
listed entities, and we have fulfilled our ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
An overview of the scope of our audit
During our audit planning, we determined materiality and assessed the risks of
material misstatement in the financial statements including the consideration
of where directors made subjective judgements, for example, in respect of the
assumptions that underlie significant accounting estimates and their
assessment of future events that are inherently uncertain. We tailored the
scope of our audit in order to perform sufficient work to enable us to provide
an opinion on the financial statements as a whole taking into account the
Company, its accounting processes and controls and the industry in which it
operates.
Emphasis of matter
We draw your attention to note 6 and note 12 of the financial statements,
which include unlisted investments held by the Company and carried at
£4,049,925 (2022: £6,852,817) based on Directors' valuations. These are
Level III investments and have been valued based on the recent sales price of
the investments and/or using relevant market proxies where available. The
Directors have also considered market expectations of future performance of
the entity's industry sector, in particular known interest in the area of
current exploration, in arriving at their valuations. Our audit opinion is not
modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
· Valuation of Investments. The valuation of the Company's
investments is a key driver of the Company's investment return and investments
represent a material proportion of the Company's
financial assets. The relevant accounting policies and investment composition
are discussed in note 2 and note 6, respectively, to the financial statements.
The investments represent listed and unlisted equity instruments amounting to
£0.73 million and
£4.05 million, respectively, as at 30 June 2023. The identified risk
predominantly relates to the unquoted investment which valuation carries a
greater degree of judgement by the directors and has been valued based upon
the price of recent investments, a valuation basis included in the
International Private Equity and Venture Capital Guidelines (IPEVC
Guidelines).
Our main audit procedures to address the identified risk in respect of the
unlisted investment were (a) we discussed with management their unlisted
valuation methodology, and assessed the recognition and measurement of the
unlisted investment held for compliance with IFRSs, and whether it had been
accounted for in accordance with the stated accounting policy and with IPEVC
Guidelines; (b) we substantiated the nature and background of recent
transactions which had been used as the basis of the valuation. We have not
identified any material issues from the completion of the above procedures;
and (c) where the price of recent transaction does not coincide to the
Company's year-end, we have performed independent research about events or
conditions that may indicate the need to recalibrate the price to take into
account the impact of such event or condition.
· Risk of management override of controls. In accordance with
ISAs (UK), we are required to consider the risk of management override of
internal controls. Due to the unpredictable nature of this risk, we are
required to assess it as a significant risk requiring special audit
consideration.
Our audit work included, but was not restricted to, specific procedures
relating to the risk that are required by ISA (UK) 240, The Auditor's
Responsibilities Relating to Fraud in an Audit of Financial Statements, which
includes the testing of journal entries, evaluation of judgements and
assumptions in management's estimate, and test of significant transactions
outside the normal course of business. We have not identified any material
issues from the completion of the above procedures.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting included understanding
the nature of the Company, its business model, system of internal control and
related risks, reviewing the performance of the underlying investments,
critically assessing the key assumptions made by management including its
appropriateness in the context of the financial reporting framework, and
evaluating the directors' plans for future actions in relation to their
assessment.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements on our audit and on the
financial statements. For the purposes of determining whether the financial
statements are free from material misstatement we define materiality as the
level of misstatement that would probably influence the economic decisions of
a reasonably knowledgeable person.
We have used approximately 2% of gross assets rounded down, or £106,000
(2022: £165,000) which reflects the fact that this is an investment fund
where its market value is determined predominantly by its gross asset value.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements, or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the chairman's review or the directors' report.
We have nothing to report in respect of the following matters where the
Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept, or
· returns adequate for our audit have not been received from branches
not visited by us; or
· the financial statements are not in agreement with the accounting
records and returns; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors
As explained more fully in the statement of directors' responsibilities with
regard to the financial statements set out on page 15, the directors are
responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the company or
to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
The objectives of our audit in respect of fraud, are to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond appropriately to
instances of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of fraud rests
with both management and those charged with governance of the Company.
Our approach was as follows:
· We obtained an understanding of the legal and regulatory
requirements applicable to the Company and considered that the most
significant but not limited to the Companies (Jersey) Law 1991, AIM Rule 26
and the applicable OTCQB Market standards. We also reviewed the laws and
regulations applicable to the Company that has indirect impact to the
financial statements.
· We obtained an understanding of how the Company complies with
these requirements by discussions with management and those charged with
governance.
· We assessed the risk of material misstatement of the financial
statements, including the risk of material misstatement due to fraud and how
it might occur, by holding discussions with management and those charged with
governance.
· We inquired of management and those charged with governance as to
any known instances of non-compliance or suspected non-compliance with laws
and regulations.
· We reviewed the compliance reports and minutes of the meeting to
see whether there is non-compliance reported to management and those charged
with governance.
· Based on this understanding, we designed specific appropriate
audit procedures to identify instances of non-compliance with laws and
regulations. This included making enquiries of management and those charged
with governance and obtaining additional corroborative evidence as required.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Use of our report
This report is made solely to the Company's shareholders as a body, in
accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit
work has been undertaken so that we might state to the Company's shareholders
those matters we are required to state to them in an auditor's report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company's
shareholders as a body, for our audit work, for this report, or for the
opinions we have formed.
Jeff Vincent
For and on behalf of Moore Stephens Audit & Assurance (Jersey) Limited
1 Waverley Place
Union Street
St Helier Jersey
Channel Islands JE4 8SG
8 November 2023
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Year ended 30 June 2023 Year ended 30 June 2022
Notes £ £
Net fair value losses on financial assets held at fair value through profit or (2,718,218) (7,203,727)
loss
6
Investment income 11,816 -
Finance income 9,096 133
Administrative expenses 4 (253,071) (247,627)
Foreign exchange (losses)/gains (23,893) 23,971
Operating loss (2,974,270) (7,427,250)
Loss before tax (2,974,270) (7,427,250)
Tax 3 - -
Loss after tax (2,974,270) (7,427,250)
Other comprehensive income - -
Total comprehensive loss for the year (2,974,270) (7,427,250)
Basic earnings per share (pence) continuing and total operations 5 (2.06) (5.16)
Diluted earnings per share (pence) continuing and total operations 5 (2.06) (5.16)
The Company has no items of other comprehensive income.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
As at As at
30 June 2023 30 June 2022
Notes £ £
ASSETS
Non-current assets
Financial assets held at fair value through profit or loss 6 4,779,202 7,261,904
4,779,202 7,261,904
Current assets
Other receivables and prepayments 7 44,977 10,146
Cash and cash equivalents 8 478,200 1,003,090
523,177 1,013,236
Total assets 5,302,379 8,275,140
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 9 54,439 52,930
54,439 52,930
Total Liabilities 54,439 52,930
EQUITY
Stated capital 16,652,482 16,652,482
Share based payment reserve 11 469,670 469,670
Retained deficit (11,874,212) (8,899,942)
Total equity 5,247,940 8,222,210
Total liabilities and equity 5,302,379 8,275,140
These financial statements were approved and authorised for issue by the Board
of Directors on 8 November 2023 and were signed on its behalf by:
D R King
Director
8 November 2023
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Retained Total
Stated Share-based
capital payment reserve deficit equity
£ £ £ £
As at 1 July 2021 16,652,482 469,670 (1,472,692) 15,649,460
Comprehensive income
Total Comprehensive loss for the year ended 30 June 2022 - - (7,427,250) (7,427,250)
As at 30 June 2022 16,652,482 469,670 (8,899,942) 8,222,210
Comprehensive income
Total Comprehensive loss for the year ended 30 June 2023 - - (2,974,270) (2,974,270)
As at 30 June 2023 16,652,482 469,670 (11,874,212) 5,247,940
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
Year ended 30 June 2023 Year ended 30 June 2022
Notes £ £
Cash flows from operating activities
Loss for the year (2,974,270) (7,427,250)
Adjustments for:
Net loss on financial assets at fair value through profit or loss 2,718,218 7,203,727
Movement in other receivables and prepayments (34,831) (5,704)
Movement in trade and other payables 1,509 13,395
Net cash used in operating activities (289,374) (215,832)
Cash flows from investing activities
Proceeds from return of capital on investment 6 299,320 -
Purchase of investments 6 (534,836) -
Net cash used in investing activities (235,516) -
Net decrease in cash and cash equivalents (524,890) (215,832)
Cash and cash equivalents at beginning of year 1,003,090 1,218,922
Cash and cash equivalents at end of year 8 478,200 1,003,090
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
1. GENERAL INFORMATION AND STATEMENTS OF COMPLIANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION
Westmount Energy Limited (the "Company") operates solely as an energy
investment company. The investment strategy of the Company is to invest in and
provide follow on capital to small and medium sized companies that have
significant growth possibilities.
The Company was incorporated in Jersey on 1 October 1992 under the Companies
(Jersey) Law 1991, as amended, and is a public company with registered number
53623. The Company is listed on the London Stock Exchange Alternative
Investment Market ("AIM"). On 1 December 2020 the Company commenced
cross-trading on the OTCQB Market in New York, U.S., under the ticker symbol
"WMELF".
Basis of Preparation
The financial statements are prepared on a going concern basis in accordance
with International Financial Reporting Standards as adopted by the European
Union ("IFRS") and applicable legal and regulatory requirements of the
Companies (Jersey) Law 1991. The financial statements have been prepared under
the historical cost convention as modified by the valuation of financial
assets held at fair value through profit or loss.
The Directors are satisfied that the Company has sufficient liquidity to meet
its operational expenditure and obligations from the date of approval of the
financial statements. The Directors monitor the income and expenditure of the
Company and have concluded that, at the time of approving the financial
statements of the Company, there is a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future. Thus they have adopted the going concern basis of
accounting in preparing the annual financial statements.
Ukraine invasion
During the prior year, Ukraine was invaded by the Russian military. This had
an immediate impact on the global economy due to sanctions being imposed on
Russia. Oil and gas prices have risen significantly and there have been
restrictions on the exportation of goods from both the Ukraine and Russia. In
preparing these financial statements, these uncertainties have been considered
throughout. The Directors will continue to monitor the situation on a regular
basis.
2. ACCOUNTING POLICIES
The significant accounting policies that have been applied in the preparation
of these financial statements are summarised below. These accounting policies
have been used throughout all periods presented in the financial statements.
New standards, amendments and interpretations to existing standards that are
effective in the current year
There are no standards, amendments to standards or interpretations that are
effective for annual periods beginning on 1 July 2022 that have a material
effect on the financial statements of the Company.
New standards, amendments and interpretations to existing standards that are
not yet effective and have not been adopted early by the Company
At the date of authorisation of these financial statements there are no other
standards that are not yet effective and that would be expected to have a
material impact on the Company in the current or future reporting periods and
on foreseeable future transactions.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the
use of accounting estimates and the exercise of judgement by management while
applying the Company's accounting policies in relation to the value of options
issued and derivative financial instruments, as set out in notes 11, 12 and
13. Derivative financial instruments, which are embedded in the convertible
loan notes issued by the Company, have been presented separately from the host
contract. The bifurcation of the embedded derivative financial instruments
requires judgement by management to estimate the fair value of the derivatives
on initial recognition of the financial instrument.
These estimates are based on the management's best knowledge of the events
which existed at the date of issue of the financial statements and at the
statement of financial position date however, the actual results may differ
from these estimates.
Financial assets at fair value through profit and loss that are not listed
have been valued in accordance with IFRS using the International Private
Equity and Venture Capital ("IPEVC") Guidelines and information received from
the investment entity. The inputs to value these assets require significant
estimates and judgements to be made by the Directors. The Directors have
considered the sensitivity of the valuations as detailed in note 12.
Functional and presentation currency
The functional currency of the Company is United Kingdom Pounds Sterling
("Sterling"), the currency of the primary economic environment in which the
Company operates. The presentation currency of the Company for accounting
purposes is also Sterling.
Foreign currency monetary assets and liabilities are translated into Sterling
at the rate of exchange ruling on the last day of the Company's financial
year. Foreign currency non-monetary items that are measured at fair value in a
foreign currency are translated into Sterling using the exchange rates at the
date when the fair value was determined. Foreign currency transactions are
translated at the exchange rate ruling on the date of the transaction. Gains
and losses arising on the currency translation are included in administrative
expenses in the Statement of Comprehensive Income in the year in which they
arise.
Financial instruments
Financial assets and financial liabilities are recognised when the Company
becomes party to the contractual provisions of the instrument.
(a) Classification
The Company classifies its financial assets in the following measurement
categories:
- those to be measured subsequently at fair value (either
through other comprehensive income or through profit or loss); and
- those to be measured at amortised cost.
The classification depends on the entity's business model for managing the
financial assets and the contractual terms of the cash flows. The Company
determines the classification of its financial assets and financial
liabilities at initial recognition.
Financial liabilities which are not financial liabilities held at fair value
through profit or loss are classified as other financial liabilities and held
at amortised cost.
(b) Recognition and measurement
Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities (other than financial
assets and financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
the statement of comprehensive income.
Subsequent to initial recognition, financial assets at fair value through
profit or loss are re-measured at fair value. For listed investments, fair
value is determined by reference to stock exchange quoted market bid prices at
the close of business at the end of the reporting year, without deduction for
transaction costs necessary to realise the asset. For non-listed investments
fair value is determined by using recognised valuation methodologies, in
accordance with the IPEVC Guidelines. Gains or losses arising from changes
in the fair value of financial assets at fair value through profit or loss are
presented in the statement of comprehensive income in the period in which they
arise.
Subsequent measurement of the Company's debt instruments depends on the model
for managing the asset and the cash flow characteristics of the asset.
The Company measures debt instruments at amortised cost if they are held for
collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. The Company
recognises any impairment loss on initial recognition and any subsequent
movement in the impairment provision in the statement of comprehensive income.
Debt instruments which do not represent solely payments of principal and
interest are measured at fair value through profit or loss.
Financial liabilities, which includes borrowings, are measured at amortised
cost using the effective interest method. The effective interest rate is the
rate that exactly discounts estimated future cash payments through the
expected life of the financial liability or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Financial liabilities at fair value through profit or loss are re-measured at
fair value. Gains or losses arising from changes in fair value of financial
liabilities at fair value through profit or loss are presented in the
statement of comprehensive income in the period in which they arise.
(b) Impairment
Under IFRS 9, the impairment model requires the recognition of impairment
provisions based on expected credit losses ("ECL") rather than only incurred
credit losses as was the case under IAS 39. IFRS 9 permits a simplified
approach to trade and other receivables which allows the Company to
recognise the loss allowance at initial recognition and throughout its life
at an amount equal to lifetime ECL. ECL are a probability-weighted estimate
of credit losses. A credit loss is the difference between the cash flows that
are due to an entity in accordance with the contract and the cash flows that
the entity expects to receive discounted at the original effective interest
rate. ECL consider the amount and timing of payments, thus a credit loss
arises even if the entity expects to be paid in full but later than when
contractually due.
The historical default rate has been considered by the Directors and there is
no history of bad debt. Under IFRS 9 ECL Model as well, which is forward
looking, all factors that could contribute to expected future losses have been
considered by the Directors and there is no expectation of credit loss in the
future. As such the Directors concluded that there is no material impact on
the financial statements.
(c) Derecognition
A financial asset or part of a financial asset is derecognised when the rights
to receive cash flows from the asset have expired and substantially all risks
and rewards of the asset have been transferred.
The Company derecognises a financial liability when the obligation under the
liability is discharged, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call with
banks and cash with broker. For the purpose of the Statement of Cash Flows,
cash and cash equivalents are considered to be all highly liquid investments
with maturity of three months or less at inception.
Equity, reserves and dividend payments
Ordinary shares are classified as equity. Transaction costs associated with
the issuing of shares are deducted from stated capital. Retained deficit
include all current and prior period retained profits and losses. Shares are
classified as equity when there is no obligation to transfer cash or other
assets.
Income and Expenditure
The income and expenses of the Company are recognised on an accruals basis in
the Statement of Comprehensive Income.
Share options
Equity-settled share-based payment transactions are measured at the fair value
of the goods and services received unless that cannot be reliably estimated,
in which case they are measured at the fair value of the equity instruments
granted. Fair value is measured at the grant date and is estimated using
valuation techniques as set out in note 11. The fair value is recognised in
the Statement of Comprehensive Income, with a corresponding increase in equity
via the share option account in profit or loss. When options are exercised,
the relevant amount in the share option account is transferred to stated
capital. When options expire, the Company does not subsequently reverse the
amounts already recognised for services received from the Directors.
3. TAXATION
The Company is subject to income tax at a rate of 0%.
The Company is registered as an International Services Entity under the Goods
and Services Tax (Jersey) Law 2007 and a fee of £300 has been paid, which has
been included in administrative expenses.
4. ADMINISTRATIVE EXPENSES
2023 2022
£ £
Administration and consultancy fees 52,871 55,755
Advisory fees 29,779 26,922
Audit fees 19,264 16,636
Directors' fees 60,000 60,000
Legal and professional fees 26,556 20,853
Printing and stationery 23,324 20,720
Registered agent's fees 20,733 22,459
Other expenses 20,544 24,282
253,071 247,627
5. EARNINGS PER SHARE
2023 2022
Basic earnings per share (pence) (2.06) (5.16)
Diluted earnings per share (pence) (2.06) (5.16)
Current year loss
The calculation of diluted earnings per share is not required this year as the
loss for the year is not diluted. The calculations have been left in for
information.
The table below presents information on the profit attributable to the
shareholders and the weighted average number of shares used in the calculating
the basic and diluted earnings per share.
2023 2022
Basic earnings per share £ £
Loss attributable to the shareholders of the Company (2,974,270) (7,427,250)
Diluted earnings per share
(Loss)/profit attributable to the shareholders of the Company:
Used in calculating basic earnings per share (2,974,270) (7,427,250)
Add interest expense - -
Loss attributable to the shareholders of the Company used in calculating (2,974,270) (7,427,250)
diluted earnings per share
No. of shares No. of shares
Weighted average number of ordinary shares used as the denominator in 144,051,486 144,051,486
calculating basic earnings per share
Adjustments for calculating of diluted earnings per share:
Share options - -
Weighted average number of ordinary shares and potential ordinary shares used 144,051,486 144,051,486
as the denominator in calculating diluted earnings per share
Share options
The share options have been included in the determination of the diluted
earnings per share to the extent to which they are dilutive.
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2023 2022
£ £
Equity investments
Africa Oil Corp ("AOC") 503,317 -
Argos Resources Ltd ("Argos") 3,480 17,400
Cataleya Energy Corporation ("Cataleya") 1,867,404 4,670,296
Eco Atlantic Oil & Gas Ltd ("Eco Atlantic") 216,750 384,750
JHI Associates Inc ("JHI") 2,182,521 2,182,521
Ratio Petroleum Energy Limited Partnership ("Ratio") 5,730 6,937
Total investments 4,779,202 7,261,904
Net changes in fair value of financial assets designated at fair value through
profit or loss
2023 2022
£ £
Opening cumulative unrealised (loss) / gain (5,599,369) 1,604,358
Net unrealised movement (2,251,229) (7,203,727)
Cumulative unrealised (loss) / gain on financial assets at fair value through (7,850,598) (5,599,369)
profit or loss
2023 2022
£ £
Unrealised loss (2,251,229) (7,203,727)
Realised loss on return of capital of financial assets (466,989) -
Net changes in fair value of financial assets at fair value through profit or (2,718,218) (7,203,727)
loss
On 30 June 2023, the fair value of the Company's holding of 300,000 (2022:
£Nil) ordinary fully paid shares in AOC, representing 0.06% (2022: 0.00%) of
the issued share capital of the company, was £503,317 (2022: £Nil) (1.68p
per share (2022: £Nil)). 300,000 shares were purchased in the current year.
No shares were disposed of in the current nor prior years.
On 30 June 2023, the fair value of the Company's holding of 1,000,000 (2022:
1,000,000) ordinary fully paid shares in Argos, representing 0.43% (2022:
0.43%) of the issued share capital of the company, was £3,480 (2022:
£17,400) (0.35p per share (2022: 1.74p per share)). No shares were purchased
or disposed of in the current nor prior years.
On 30 June 2023, the fair value of the Company's holding of 1,500,000 (2022:
1,500,000) ordinary fully paid shares in Eco Atlantic, representing 0.44%
(2022: 0.44%) of the issued share capital of the
company, was £216,750 (2022: £384,750) (14.45p per share (2022: 25.65p per
share)). No shares were purchased or disposed of in the current year nor
prior years.
On 30 June 2023, the fair value of the Company's holding of 89,653 (2022:
89,653) ordinary fully paid shares in Ratio, representing 0.04% (2022: 0.04%)
of the issued share capital of the Company, was £5,730 (2022: £6,937) (6.39p
per share (2022: 7.74p per share)). No shares were purchased or disposed of
during the current nor prior years.
On 30 June 2023, the Directors' estimate of the fair value of the Company's
holding of 474,816 (2022: 567,185) shares in Cataleya was £1,867,404 (2022:
£4,670,296) (£3.93 per share (2022: £8.23)). During the year, Cataleya
completed a return of capital transaction for 92,369 shares for a total amount
of £299,320. No shares were purchased during the current nor prior years.
On 30 June 2023, the Directors' estimate of the fair value of the Company's
holding of 5,651,270 (2022: 5,651,270) shares in JHI was £2,182,521 (2022:
£2,182,521) (£0.39 per share (2022: £0.39 per share)). No shares were
purchase or disposed of in the current year.
7. OTHER RECEIVABLES AND PREPAYMENTS
2023 2022
£ £
Accrued income 11,816 -
Prepayments 33,161 10,146
44,977 10,146
8. CASH AND CASH EQUIVALENTS
2023 2022
£ £
Cash at bank 475,569 465,501
Cash at broker 2,631 537,589
478,200 1,003,090
9. TRADE AND OTHER PAYABLES
2023 2022
£ £
Accrued expenses 54,439 52,930
10. STATED CAPITAL
Allotted, called up and fully paid: Ordinary shares Ordinary shares
No. £
1July 2021 144,051,486 16,652,482
Additions - -
1July 2022 144,051,486 16,652,482
Additions - -
At 30 June 2023 144,051,486 16,652,482
There were no share issues nor redemptions during the year ended 30 June 2023
(2022: £Nil).
11. SHARE-BASED PAYMENT RESERVE
2023 2022 2017
£ £ £
At 1 July 469,670 469,670 49,906
Share options expense - - 3,000
At 30 June 469,670 469,670
The number and weighted average exercise price of share options are as
follows:
2023 2023 2022 2022
Weighted average exercise price (p) Weighted average exercise price (p)
Number of options Number of options
Outstanding at start of the year 15.00 2,250,000 11.25 4,500,000
Granted during the year - - - -
Expired during the year - - - (2,250,000)
Exercised during the year - - - -
Outstanding at end of the year 15.00 2,250,000 15.00 2,250,000
Exercisable at end of the year 15.00 2,250,000 15.00 2,250,000
No options expired during the year (30 June 2022: 2,250,000).
12. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial risks:
market risk (including foreign exchange risk, price risk and interest rate
risk), credit risk and liquidity risk. The Company's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling. The Company is
exposed to currency risk through its investments in Cataleya, JHI and Ratio,
and cash at bank. The Directors have not hedged this exposure.
Currency exposure as at 30 June:
Assets and net exposure Assets and net exposure
2023 2022
Currency £ £
US Dollars 2,461,455 5,003,663
Canadian Dollars 2,550,667 2,047,350
Israeli Shekel 5,730 6,937
Total 5,017,852 7,057,950
If the value of sterling had strengthened by 5% against all of the currencies,
with all other variables held constant at the reporting date, the equity
attributable to equity holders and the loss for the period would have
decreased by £250,893 (2022: £352,898). The weakening of sterling by 5%
would have an equal but opposite effect. The calculations are based on the
foreign currency denominated financial assets as at year end and are not
representative of the period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows of a
financial instrument will fluctuate due to changes in market prices. The
Company is exposed to price risk on the investments held by the Company and
classified by the Company on the Statement of Financial Position as at fair
value through profit or loss. To manage its price risk, management closely
monitor the activities of the underlying investments.
The Company's exposure to price risk is as follows:
Fair value
£
Fair Value Through Profit or Loss, as at 30 June 2023 4,779,202
Fair Value Through Profit or Loss, as at 30 June 2022 7,261,904
With the exception of JHI and Cataleya, the Company's investments are all
publicly traded and listed on either the AIM, OTCQB, Tel Aviv Stock Exchange
or Toronto Stock Exchange. A 30% increase in market price would decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £218,783 (2022: £122,726). A 30% reduction in market price
would have increased the pre-tax loss for the year and reduced the net assets
attributable to shareholders by an equal but opposite amount. 30% represents
management's assessment of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI and Cataleya would decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £1,214,978 (2022: £2,055,845). A 30% reduction in market
price would have increased the pre-tax loss for the year and reduced the net
assets attributable to shareholders by an equal but opposite amount. 30%
represents management's assessment of a reasonably possible change in the
market price of JHI and Cataleya based on the price of share purchases over
the last two years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Company is not exposed to material interest rate risk.
a) Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet commitments it has entered into with the Company. The
Directors do not believe the Company is subject to any significant credit risk
exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets exposed to
credit risk amounted to the following:
2023 2022
£ £
Cash and cash equivalents 478,200 1,003,090
The Company considers that all the above financial assets are not impaired or
past due for each of the reporting dates under review and are of good credit
quality.
b) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities as
they fall due. The Company's primary source of liquidity consists of cash and
cash equivalents and those financial assets which are publicly traded and held
at fair value through profit or loss and which are deemed highly liquid.
The following table details the contractual, undiscounted cash flows of the
Company's financial liabilities
As at 30 June 2023
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 54,439 - - 54,439
54,439 - - 54,439
As at 30 June 2022
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 52,930 - - 52,930
52,930 - - 52,930
Capital Management
The Company's objective when managing capital is to safeguard the Company's
ability to continue as a going concern in order to provide optimum returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce cost of capital.
In order to maintain or adjust the capital structure, the Company may issue
new shares, return capital to shareholders or sell assets. The Company does
not have any debt nor is the Company subject to any external capital
requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through profit
or loss and fair value is determined via one of the following categories:
Level I - An unadjusted quoted price in an active market provides the most
reliable evidence of fair value and is used to measure fair value whenever
available. As required by IFRS 7, the Company will
not adjust the quoted price for these investments, (even in situations where
it holds a large position and a sale could reasonably impact the quoted
price).
Level II - Inputs are other than unadjusted quoted prices in active markets,
which are either directly or indirectly observable as of the reporting date,
and fair value is determined through the use of models or other valuation
methodologies.
Level III - Inputs are unobservable for the investment and include situations
where there is little, if any, market activity for the investment. The
inputs into the determination of fair value require significant management
judgment or estimation.
The following table shows the classification of the Company's financial
assets:
Level I Level II Level III Total
£ £ £ £
At 30 June 2023 729,277 - 4,049,925 4,779,202
At 30 June 2022 409,087 - 6,852,817 7,261,904
The Company has classified quoted investments as Level I, derivative financial
instruments as Level II and unquoted investments as Level III. The Level III
investment is at an early stage of development and therefore has been valued
based on the recent price of the investment. The Directors have considered
market expectations of future performance of the entity's industry sector, in
particular known interest in the area of current exploration. As such, the
Directors consider that the recent price of the investment in Cataleya fairly
reflects the value of the investment as at 30 June 2023. Following a recently
completed transaction in JHI the Directors have used this price as their basis
for determining the Company's fair value investment in JHI. There have been no
movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown below:
2023 2022
£ £
At start of the year 6,852,817 13,989,918
Proceeds from return of capital (299,320) -
Change in fair value (2,503,572) (7,137,101)
At end of the year 4,049,925 6,852,817
13. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2023 2022 2023 2022
Directors' fees Directors' fees Options outstanding Options outstanding
£ £
DRKing 20,000 20,000 250,000 250,000
DCorcoran - - 1,250,000 1,250,000
GWalsh 20,000 20,000 500,000 500,000
TO'Gorman 20,000 20,000 250,000 250,000
60,000 60,000 2,250,000 2,250,000
At the year end the Company owed £10,000 (2022: £10,000) in outstanding
Directors' fees.
During the year consultancy fees of £21,469 (2022: £23,694) were paid to D
Corcoran.
No options were granted during the current year. No options were exercised
during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
The Company does not employ any staff except for its Board of Directors. The
Company does not contribute to the pensions or any other long-term incentive
schemes on behalf of its Directors.
14. RELATED PARTIES
Canaccord Genuity as a significant shareholder of the Company is considered a
related party under AIM rules. The Company paid £400 in Custody fees to
Canaccord Genuity for the year (2022: £400).
The shares held by the Directors are declared in the Directors' report.
15. CONTROLLING PARTY
In the opinion of the Directors, the Company does not
have a controlling party.
16. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events subsequent to
the year-end that require adjustment or disclosure in the financial
statements.
8. CASH AND CASH EQUIVALENTS
2023 2022
£ £
Cash at bank 475,569 465,501
Cash at broker 2,631 537,589
478,200 1,003,090
9. TRADE AND OTHER PAYABLES
2023 2022
£ £
Accrued expenses 54,439 52,930
10. STATED CAPITAL
Allotted, called up and fully paid: Ordinary shares Ordinary shares
No. £
1 July 2021 144,051,486 16,652,482
Additions - -
1 July 2022 144,051,486 16,652,482
Additions - -
At 30 June 2023 144,051,486 16,652,482
There were no share issues nor redemptions during the year ended 30 June 2023
(2022: £Nil).
11. SHARE-BASED PAYMENT RESERVE
2023 2022 2017
£ £ £
At 1 July 469,670 469,670 49,906
Share options expense - - 3,000
At 30 June 469,670 469,670
The number and weighted average exercise price of share options are as
follows:
2023 2023 2022 2022
Weighted average exercise price (p) Weighted average exercise price (p)
Number of options Number of options
Outstanding at start of the year 15.00 2,250,000 11.25 4,500,000
Granted during the year - - - -
Expired during the year - - - (2,250,000)
Exercised during the year - - - -
Outstanding at end of the year 15.00 2,250,000 15.00 2,250,000
Exercisable at end of the year 15.00 2,250,000 15.00 2,250,000
No options expired during the year (30 June 2022: 2,250,000).
12. FINANCIAL RISK
The Company's investment activities expose it to a variety of financial risks:
market risk (including foreign exchange risk, price risk and interest rate
risk), credit risk and liquidity risk. The Company's overall risk management
programme focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the Company's financial performance.
a) Market risk
i) Foreign exchange risk
The Company's functional and presentation currency is sterling. The Company is
exposed to currency risk through its investments in Cataleya, JHI and Ratio,
and cash at bank. The Directors have not hedged this exposure.
Currency exposure as at 30 June:
Assets and net exposure Assets and net exposure
2023 2022
Currency £ £
US Dollars 2,461,455 5,003,663
Canadian Dollars 2,550,667 2,047,350
Israeli Shekel 5,730 6,937
Total 5,017,852 7,057,950
If the value of sterling had strengthened by 5% against all of the currencies,
with all other variables held constant at the reporting date, the equity
attributable to equity holders and the loss for the period would have
decreased by £250,893 (2022: £352,898). The weakening of sterling by 5%
would have an equal but opposite effect. The calculations are based on the
foreign currency denominated financial assets as at year end and are not
representative of the period as a whole.
ii) Price risk
Price risk is the risk that the fair value of the future cash flows of a
financial instrument will fluctuate due to changes in market prices. The
Company is exposed to price risk on the investments held by the Company and
classified by the Company on the Statement of Financial Position as at fair
value through profit or loss. To manage its price risk, management closely
monitor the activities of the underlying investments.
The Company's exposure to price risk is as follows:
Fair value
£
Fair Value Through Profit or Loss, as at 30 June 2023 4,779,202
Fair Value Through Profit or Loss, as at 30 June 2022 7,261,904
With the exception of JHI and Cataleya, the Company's investments are all
publicly traded and listed on either the AIM, OTCQB, Tel Aviv Stock Exchange
or Toronto Stock Exchange. A 30% increase in market price would decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £218,783 (2022: £122,726). A 30% reduction in market price
would have increased the pre-tax loss for the year and reduced the net assets
attributable to shareholders by an equal but opposite amount. 30% represents
management's assessment of a reasonably possible change in the market prices.
A 30% increase in the market price of JHI and Cataleya would decrease the
pre-tax loss for the year and increase the net assets attributable to ordinary
shareholders by £1,214,978 (2022: £2,055,845). A 30% reduction in market
price would have increased the pre-tax loss for the year and reduced the net
assets attributable to shareholders by an equal but opposite amount. 30%
represents management's assessment of a reasonably possible change in the
market price of JHI and Cataleya based on the price of share purchases over
the last two years.
iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market interest
rates. The Company is not exposed to material interest rate risk.
a) Credit risk
Credit risk is the risk that an issuer or counterparty will be unable or
unwilling to meet commitments it has entered into with the Company. The
Directors do not believe the Company is subject to any significant credit risk
exposure regarding trade receivables.
At the end of the reporting period, the Company's financial assets exposed to
credit risk amounted to the following:
2023 2022
£ £
Cash and cash equivalents 478,200 1,003,090
The Company considers that all the above financial assets are not impaired or
past due for each of the reporting dates under review and are of good credit
quality.
b) Liquidity Risk
Liquidity risk is the risk that the Company cannot meet its liabilities as
they fall due. The Company's primary source of liquidity consists of cash and
cash equivalents and those financial assets which are publicly traded and held
at fair value through profit or loss and which are deemed highly liquid.
The following table details the contractual, undiscounted cash flows of the
Company's financial liabilities
As at 30 June 2023
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 54,439 - - 54,439
54,439 - - 54,439
As at 30 June 2022
Up to 3 months Up to 1 year Over 1 year Total
£ £ £ £
Financial liabilities
Trade and other payables 52,930 - - 52,930
52,930 - - 52,930
Capital Management
The Company's objective when managing capital is to safeguard the Company's
ability to continue as a going concern in order to provide optimum returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce cost of capital.
In order to maintain or adjust the capital structure, the Company may issue
new shares, return capital to shareholders or sell assets. The Company does
not have any debt nor is the Company subject to any external capital
requirements.
Fair Value Estimation
The Company has classified its financial assets as fair value through profit
or loss and fair value is determined via one of the following categories:
Level I - An unadjusted quoted price in an active market provides the most
reliable evidence of fair value and is used to measure fair value whenever
available. As required by IFRS 7, the Company will
not adjust the quoted price for these investments, (even in situations where
it holds a large position and a sale could reasonably impact the quoted
price).
Level II - Inputs are other than unadjusted quoted prices in active markets,
which are either directly or indirectly observable as of the reporting date,
and fair value is determined through the use of models or other valuation
methodologies.
Level III - Inputs are unobservable for the investment and include situations
where there is little, if any, market activity for the investment. The
inputs into the determination of fair value require significant management
judgment or estimation.
The following table shows the classification of the Company's financial
assets:
Level I Level II Level III Total
£ £ £ £
At 30 June 2023 729,277 - 4,049,925 4,779,202
At 30 June 2022 409,087 - 6,852,817 7,261,904
The Company has classified quoted investments as Level I, derivative financial
instruments as Level II and unquoted investments as Level III. The Level III
investment is at an early stage of development and therefore has been valued
based on the recent price of the investment. The Directors have considered
market expectations of future performance of the entity's industry sector, in
particular known interest in the area of current exploration. As such, the
Directors consider that the recent price of the investment in Cataleya fairly
reflects the value of the investment as at 30 June 2023. Following a recently
completed transaction in JHI the Directors have used this price as their basis
for determining the Company's fair value investment in JHI. There have been no
movements in classifications during the year.
A reconciliation of the movements in Level III investments is shown below:
2023 2022
£ £
At start of the year 6,852,817 13,989,918
Proceeds from return of capital (299,320) -
Change in fair value (2,503,572) (7,137,101)
At end of the year 4,049,925 6,852,817
13. DIRECTORS' REMUNERATION AND SHARE OPTIONS
2023 2022 2023 2022
Directors' fees Directors' fees Options outstanding Options outstanding
£ £
D R King 20,000 20,000 250,000 250,000
D Corcoran - - 1,250,000 1,250,000
G Walsh 20,000 20,000 500,000 500,000
T O'Gorman 20,000 20,000 250,000 250,000
60,000 60,000 2,250,000 2,250,000
At the year end the Company owed £10,000 (2022: £10,000) in outstanding
Directors' fees.
During the year consultancy fees of £21,469 (2022: £23,694) were paid to D
Corcoran.
No options were granted during the current year. No options were exercised
during the current nor prior years.
The shares held by the Directors are declared in the Directors' report.
The Company does not employ any staff except for its Board of Directors. The
Company does not contribute to the pensions or any other long-term incentive
schemes on behalf of its Directors.
14. RELATED PARTIES
Canaccord Genuity as a significant shareholder of the Company is considered a
related party under AIM rules. The Company paid £400 in Custody fees to
Canaccord Genuity for the year (2022: £400).
The shares held by the Directors are declared in the Directors' report.
15. CONTROLLING PARTY
In the opinion of the Directors, the Company does not
have a controlling party.
16. SUBSEQUENT EVENTS
In the opinion of the Directors, there are no significant events subsequent to
the year-end that require adjustment or disclosure in the financial
statements.
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